FRANCHISING REGISTRATION IN VIETNAM

Business consulting

1. What is Franchising registration?
2. Cases not requiring Franchising registration in Vietnam
3. Requirements for Franchising registration in Vietnam
4. Procedures for Franchising registration in Vietnam
5. Cases of revocation of Franchising registration in Vietnam
6. The necessity of hiring a Lawyer for Franchising registration in Vietnam
7. Phong & Partners Law firm specializes in providing Franchising registration services in Vietnam

In today's globalized economy, franchising has emerged as an attractive investment channel, offering significant growth opportunities for both domestic and foreign merchants. However, franchising from foreign countries into Vietnam faces numerous obstacles due to differences in business culture, legal systems, and regulations, which have posed substantial challenges for foreign investors. To assist merchants in overcoming these barriers and succeeding in implementing franchising operations, Phong & Partners will provide an overview of Franchising registration in Vietnam, along with important considerations that investors need to grasp.

1. What is Franchising registration?

According to Article 284 of the Commercial Law 2005 defines franchising as follows: “Franchising is a commercial activity whereby the franchisor allows and requires the franchisee to conduct the buying and selling of goods or providing services under the following conditions:

The purchase of goods or the provision of services is conducted according to the business organization method specified by the franchisor and is associated with the franchisor's trademarks, trade names, business know-how, business slogans, business symbols, and advertising.

The franchisor has the right to supervise and assist the franchisee in managing the business."

Thus, Franchising registration can be understood as a mandatory procedure that merchants intending to franchise must carry out with the Competent authority in Vietnam before engage in franchising activities.

The scope of franchising in Vietnam is open to both domestic and foreign merchants.

2. Cases not requiring Franchising registration in Vietnam

According to the provisions in Clause 1, Article 17 of Decree 35/2006/ND-CP, as supplemented by Clause 2, Article 3 of Decree 120/2011/ND-CP, the following cases are exempt from Franchising registration:

Domestic franchising;

Franchising from Vietnam to abroad;

Thus, it can be understood that Franchising registration only applies to the franchising activities of foreign merchants entering Vietnam. For cases that do not require Franchising registration, it is necessary to report to the Department of Industry and Trade.

3. Requirements for Franchising registration in Vietnam

The merchant is allowed to grant commercial rights when the business system intended for franchising has been in operation for at least 01 year.

According to Article 8 of Decree 08/2018/ND-CP.

The merchants must register their franchising activities with the Ministry of Industry and Trade.

According to the provisions in Clause 1, Article 17 of Decree 35/2006/ND-CP, Section 1 of Circular 09/2006/TT-BTM, and Subsection a1, Point a, Clause 1, Article 2 of Circular 03/2024/TT-BCT.

4. Procedures for Franchising registration in Vietnam

Step 1: Preparing dossier

The Franchising registration application consists of the following documents:

A Franchising registration application form (according to Form MD-1 in Appendix II attached to Circular 09/2006/TT-BTM);

Application form: Here

A written description of the franchise (according to the form in Appendix III attached to Circular 09/2006/TT-BTM);

Application form: Here

A copy of the Enterprise registration certificate or equivalent document of the foreign franchisor certified by the Competent authority where the foreign franchisor was established;

A copy of the Industrial property protection certificate in Vietnam or abroad (in case of transfer of the right to use industrial property objects that have been granted a protection certificate);

Documents proving the approval of the transfer of the franchise by the original franchisor (in the case of the registrant being a secondary franchisor).

Notes:

A certified copy is a certified copy or a copy from the original record or a copy presented with the original for comparison;

If the written description of the commercial franchise, protection certificate, or document proving the approval of the transfer of the franchise is in a foreign language, it must be translated into Vietnamese and notarized according to Vietnamese law;

Copies of the Enterprise registration certificate/equivalent legal document of the foreign merchants in a foreign language must be translated into Vietnamese and certified and legalized by the Vietnamese diplomatic representative in the foreign country.

Step 2: Submitting the application to the Competent authority

The prospective franchisor shall submit the application directly to the receiving unit of the Ministry of Industry and Trade or send the application to the Ministry of Industry and Trade via postal service at 54 Hai Ba Trung Street, Hoan Kiem District, Hanoi City.

Step 3: Receiving franchising application

After receiving the application, the receiving unit shall issue a receipt to the franchising activities.

Within 2 working days from the date of receipt of the application, if the application is incomplete, the receiving agency shall send a written notification to the prospective franchisor to amend or supplement the application.

If the requirements for amending or supplementing the application are not clear, the merchant has the right to request the receiving agency to reply and explain.

Step 4: Registering franchising activities in the Franchising Acitivity Register

Within 05 working days from the date of receipt of a complete application, the Ministry of Industry and Trade shall register the franchising activity in the Franchising activity register and notify the merchant in writing of such registration.
If the registration is refused, within 05 working days form the date of receiving a complete and valid application, the Ministry of Industry and Trade must notify the prospective franchisor in writing and specify the reasons for the denial.

Note: According to Clause 75.3 of Decree No. 98/2020/ND-CP, failure to register franchising activities may result in a fine ranging form 5,000,000 VND and 10,000,000 VND for individuals engage in franchising. In cases where the administrative violation is committed by an organization, the fine will be double the amount specified for individuals.

5. Cases of revocation of Franchising registration in Vietnam

According to Article 22 of Decree 35/2006/ND-CP, the Franchising registration by merchant can be revoked in the following cases:

The merchant ceases business or changes its business line;
The merchant's Enterprise registration certificate or investment certificate is revoked.

Within 5 working days from the date of the cancellation of the Franchising registration of the merchant, the Ministry of Industry and Trade is responsible for publicly announcing the cancellation at the agency's headquarters using forms TB-6A and TB-6B as specified in Appendix II attached to Circular 09/2006/TT-BTM; simultaneously, it must update the information on the Ministry of Industry and Trade's web portal (website).

6. The necessity of hiring a Lawyer for Franchising registration in Vietnam

Franchising activities can yield significant profits, but they also come with considerable risks.

For the franchisor, one of the major concerns is the complex administrative procedures that require detailed legal knowledge. This includes the preparation of application documents, meeting specific franchising conditions, and understanding the requirements for the franchise agreement. A critical risk arises when a franchisee, after being part of the franchising system for a period, decides to break away and operate independently with a similar business model, which can lead to disputes within the franchising framework.
For the franchisee, there is a worry about the interconnectedness and uniformity between the franchisor and franchisees. If one party violates any terms or makes a mistake, it can adversely affect the reputation of the entire franchising network.

These are just some of the typical risks associated with the franchising model, and many other risks may not be considered. Therefore, merchants need to engage experienced Lawyer specializing in Franchising registration to provide thorough advice on conditions, procedures, and documentation; draft necessary documents and create a binding framework that ensures mutual benefits while representing clients in dealings with relevant authorities.

Additionally, Lawyers can provide detailed consultation on current legal regulations related to franchising, helping merchants anticipate and manage legal risks while protecting their interests throughout their business operations. With the support of Lawyer specializing in Franchising registration, merchants can save time and effort while feeling more secure when entering Vietnam's promising franchising market, meeting all necessary legal requirements for sustainable and effective operations.

7. Phong & Partners Law firm specializes in providing Franchising registration services in Vietnam

Vietnam, with its young population and vibrant consumer market, is becoming one of the most attractive destinations for international brands. Franchising has emerged as an effective investment channel, enabling merchants to rapidly expand their market presence, share risks, and leverage available resources of local partners in Vietnam.

With a team of experienced Lawyers who have a deep understanding of the law, Phong & Partners Law firm specializes in providing Franchising registration service as well as other related franchise services generally in Vietnam. From drafting franchise agreements and protecting intellectual property rights to resolving legal disputes, we are committed to supporting our clients throughout the registration process and implementation of franchise operations.

If you would like to connect with Phong & Partners Law firm, please contact us via the following information.

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PHONG & PARTNERS LAW FIRM

PHONG & PARTNERS LAWYER IN HO CHI MINH CITY

Address: Floor 9, K&M Building, 33 Ung Van Khiem, 25 Ward, Binh Thanh district, Ho Chi Minh City.

Tel: 0905.503.678

Email: phongpartners.hcmc@gmail.com

PHONG & PARTNERS LAWYER IN QUANG NAM

Address: 63 Hoang Dieu, Vinh Dien Ward, Dien Ban Town, Quang Nam Province
Tel: 0905.794.678

PHONG & PARTNERS LAWYER IN DA NANG

1. Phong & Partners in Hai Chau - Thanh Khe

Address: 6th Floor, Thanh Loi Building, 249 Nguyen Van Linh, Thanh Khe District, Da Nang.